The Effect of Disability Insurance on Beneficiaries' Mortality
NBER Disability Research Center Paper No. NB 14-06
Issued in May 2015
We study how U.S. Social Security Disability Insurance (DI) payments affect beneficiaries’ mortality. The formula linking DI payments to past earnings has “bend points,” or discontinuous changes in the marginal replacement rate, allowing us to use a regression kink design. Using Social Security Administration microdata on all new DI beneficiaries from 1997 to 2009, we document a substantial effect of DI payment amounts on mortality, particularly for the lowest-income beneficiaries. Our preferred estimates suggest that at the lower bend point, an increase of $1,000 in annual DI payments decreases beneficiaries’ probability of mortality over the subsequent four years by 0.47 percentage points per year, corresponding to an elasticity of -1.11. These large effects suggest that DI transfer payments have benefits that have not previously been recognized in analyses of the benefits and costs of DI.
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